Listing committee may oppose reform consultations

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The listing committee of the Hong Kong stock exchange may oppose further consultations on two controversial proposals - instituting quarterly reporting and extending the trading blackout for directors - even if it agrees to make changes to the market reform measures.

Hong Kong Exchanges and Clearing listing head Richard Williams began talks with Securities and Futures Commission executives yesterday on the two proposals, which had gone back and forth between the two bodies, the source said.

If the SFC agrees to make changes to the two proposals as early as today, the listing committee may discuss the proposals again at its regular meeting tomorrow.

A government spokesman said it would like to see the exchange and the SFC work out a plan that addressed market concerns.

The proposed extension of the blackout period is scheduled to take effect on April 1. It will ban directors from trading in shares of their companies from the end of the financial period to earnings announcements.

The plan met strident opposition from parts of the business community because the rule could prevent share trading by directors and large shareholders for up to seven months each year, well beyond the current two-month blackout.

But in a sign that a compromise may be reached, Mr Williams said on January 13 the committee might review the blackout rule, but only if quarterly reporting was introduced.

He said quarterly reporting would improve market transparency because it would shorten the time between the end of a reporting period and a company issuing its earnings report. Main-board companies report results every six months.

On Monday, the committee decided to ask the SFC to clarify whether it wanted to change the blackout proposal.

The blackout extension was first put forward two years ago by the SFC. It later approved a decision by the listing committee to implement the rule beginning in January, a start date later delayed to April, after a market consultation.

Since the SFC was the initiator, the source said the listing committee would only consider changes if the SFC wanted them.

The committee also wants the SFC to clarify its position on quarterly reporting.

The listing committee proposed last year that the SFC introduce the British style of quarterly reporting as early as this year, but the commission has not yet approved the change. Quarterly reporting in Britain requires only a business update at the end of the first and third quarters but not full financial figures.

Chamber of Hong Kong Listed Companies chief executive Mike Wong Ming-wai said if the SFC and the listing committee decide to make any changes to reform plans, they should consult the market again.

Former HKEx director and shareholder rights activist David Webb has opposed further consultations on either proposal.